Housing markets in 119 out of approximately 340 metro areas nationwide have returned to normal levels of economic and housing activity, as their scores of the Leading Markets Index (LMI) reached or surpassed a baseline reading of 1 in the first quarter of 2016, according to the National Association of Home Builders’ quarterly LMI release Thursday morning. This represents a year-over-year net gain of 45 markets.
The index’s nationwide score edged up 1 basis point to a score of 0.95, reflecting that the nationwide average stands at about 95% of its normal status. In the mean time, 86% of markets have shown progress in local economy and housing activities compared to a year earlier.
The index—a composite score based on three factors: single-family building permits, home prices, and employment—compares the current housing market conditions to the pre-recession normal level. For single-family permits and house prices, between the year 2000 and 2003 is used as the last normal period, and for employment, the year before the beginning of the Great Recession in 2007.
“Housing markets continue to recover gradually, edged along by a firming economy, solid job creation and low mortgage interest rates,” said NAHB Chairman Ed Brady in a statement. “We expect the housing sector to improve at a slow, but steady pace throughout the year.”
Among the three components, prices have recovered the fastest, with a current score of 1.4, which is 40% higher than the pre-recession level. Close behind is employment, which has been rapidly gaining strength in the past a few months and is about 97% of the normal time. Building permits, however, only represents 49% of what they were before the recession. Among all, only 42 metros have fully recovered to the previous sustainable level in this quarter.
Read the full release on National Association of Home Builders here >>